Eighteen percent of America’s million households. Here’s Why You’re Not One Of Them.

Every three years the US Federal Reserve conducts a survey of the US economy. This survey, called the US Survey of Consumer Finances (SCR), is a snapshot of American wealth. It describes the assets and liabilities of study participants, and shows their income, demographic characteristics, and changes in American wealth every three years. So you might ask yourself, if there are so many millionaires, why aren’t you a millionaire?

What Is The Average Millionaire Profile In The United States?

According to SCR, American millionaires tend to have a number of characteristics.

• About 18% of US households were millionaires
• The millionaire families were mostly older – most were over 55 years of age
• Most of the millionaires were couples, or couples with children.
• Millionaires tended to be better educated, and college degree holders had an average net worth of $1.9 million, nearly four times more than those who did not graduate from college.
• Millionaires used to be self-employed ($3 million net worth) or retired ($1 million net worth)
• Millions were more likely to own their homes ($1.5 million total), rather than renters ($150,000 total)
• Billionaires could own businesses and business owners had higher incomes and wealth than non-owners.

The Survey of Consumer Finances also found that most billionaires own stocks, have retirement accounts and pooled investments such as mutual funds or index funds (Source: Survey of Consumer Finances).

Is Consumer Finance Research Accurate?

Since the Consumer Finance Survey only interviews about 4,000 people, you may wonder if the data is accurate.

Corner.

The survey uses something called multi-stage area probability sampling, which is a statistical term that means the Federal Reserve selected survey participants in a way to make them representative of the entire country, according to the survey’s annual report. This study intentionally excludes members of the Forbes 400, which is a list of billionaires. Therefore, the survey shows what wealth looks like in the United States. It is as accurate as major economic studies can be.

So, Why Aren’t You A Millionaire?

If you find that you are not one of the millionaires included in this report, there could be many reasons for this. Below is a list of common reasons many people fail to become millionaires:

• You spend more than you make in a year
• You fail to pay yourself first
• You have many children, and they are very young
• You don’t have a home
• You don’t save or invest
• You always change things before you need to
• He has a low income
• You are not living a healthy life
• You don’t read
• You get a divorce
• You have at least one bad habit that drains money, such as smoking or gambling
• You are young.

If you are not currently a millionaire, or are not on the verge of becoming one, it may be because of the consequences of decisions you have made in the past. The good news is that you can make different choices from this point forward to create the wealth you want. It won’t be easy and you will need to avoid making mistakes that have limited you in the past.

You Want To Be A Millionaire – Here Are Some Things You Can Do

Becoming a millionaire is straightforward, but it requires constant effort over time. Here are some quick steps you can take to help you get on track.

• Start saving and investing as soon as possible.The Survey of Consumer Finances data is very clear – it takes time to become a millionaire.
• Put more money into your retirement accounts. Almost all of the millionaires in the Federal Reserve’s survey had retirement accounts. In contrast, very few of the poorest in the study have these. So, if you don’t have an IRA or haven’t signed up for your 401(k) through your employer, do it and contribute more.
• Buy a Home. There are hundreds of millions of opportunities to become homeowners. Home ownership results in forced savings, tax benefits and homes that generally appreciate in value. Tenants do not have these benefits, leaving homeowners with more wealth in the long run. If you don’t have one, buy a home you can afford.

So, by taking a few steps, you may be able to count yourself as one of the newly crowned millionaires in these reports in the not too distant future.

(Photo courtesy of Pamela Carls)